Understanding the Big Redevelopment Decision

Earlier this week, the state invalidated almost $5 billion worth of San Diego’s urban renewal projects planned for the next 30 years. That’s both a big number and a long time so we’ll break down what it means and how the decision could affect everything from library hours to a new home for the Chargers.

What’s Going On?

The city asked for money, and the state said no.

When the state first threatened to kill its urban renewal program known as redevelopment in early 2011, local governments across California — including San Diego — scrambled to lock up as much redevelopment money as far into the future as possible. We dubbed the phenomena Redevelopment Mardi Gras.

Once the party ended, the state began to figure out which redevelopment deals it would uphold and which it would veto. Killing a deal meant that the property tax dollars targeted for that project would instead flow back to the school districts, counties, cities and other local governments.

For San Diego, the vetoes came this week. The city lost out on $47 million of the $77 million in redevelopment funding it had requested for the first half of 2013. The state also killed$4.8 billion slated for city projects over the next three decades.

What Happens to the Projects?

The city will have to find another way to pay for them.

Most immediately, the state blocked $20 million for Ninth & Broadway, an affordable housing project downtown, $17 million for a downtown fire station and $3 million for a park in the Crossroads area. It also vetoed money planned for clean-up of an East Village bus yard, the proposed site for a new Chargers stadium.

The state did allow a $21 million payment for the North Embarcadero Visionary Plan, a revitalization of the waterfront along Harbor Drive already under construction, to go forward.

During Redevelopment Mardi Gras, the city flipped the annual loan payments from building Petco Park and an earlier Convention Center expansion from its day-to-day budget to the redevelopment ledger. The state said that wasn’t allowed.

The decision means a $14 million blow to the budget next year, and a $77 million hit over the next five years, according to the city’s independent budget analyst. This was part of the reason for new Mayor Bob Filner’s gloomy budget forecast on Wednesday. It’s unclear at this point whether the city will have to cut services to make up the debt.

The slate of denied projects will give the day-to-day budget a boost, but probably won’t make up for the lost loan payments, at least in the short term.

What About the Rest of the County?

Other cities around the county took hits, too. U-T San Diego reported that the state denied $73 million of the $160 million in redevelopment money requested countywide for the first half of 2013.

What’s Next for the City?

Most likely, the city will have to swallow the decision.

Filner said Wednesday that he wants to continue negotiating with the state, but it’s unclear what difference that will make. The state’s letter to the city calls its decision a “final determination.” There’s always the possibility of litigation.

And more bad news could be coming. The state previously signed off on using redevelopment dollars for the Petco and Convention Center loans. But since it’s now vetoed them, the state could go after the city for money already spent. This could be another multimillion-dollar hit to the budget.

I Hate Words, But Like Pictures. Can You Help?

Yes.

Earlier this month, I talked with our media partners at NBC 7 San Diego about the redevelopment decisions. The interview happened before this most recent news, but there’s good overview here of what’s at stake.

Liam Dillon is a news reporter for Voice of San Diego. He covers San Diego City Hall, the 2012 mayor’s race and big building projects. What should he write about next?